13 December 2012

Board Approves 2013 Borrowing Program, Us $300 Million Loc to Firstrand Bank and Us $150 Million for Gabon's Fertilizer Plant

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Executive Directors of the African Development Bank (AfDB) on Wednesday, December 12, in Tunis approved UA 3.76 billion (about US $5.76 billion) for the Bank's 2013 borrowing program. The amount includes UA 130 million (US $200 million) for possible draw down under the loan component of the Enhanced Private Sector Assistance (EPSA) Initiative for Africa.

The objectives of the proposed borrowing program are: (1) to ensure that the Bank has sufficient liquidity to meet its cash-flow requirements consistent with the liquidity policy; and (2) to provide cost-effective resources to its regional member countries, while further diversifying its investor base.

The amount for the 2013 borrowing program is slightly higher than the UA 3.5 billion for 2012. The Treasury Department Director, Pierre Van Peteghem, explained to the Board that as of September 30, 2012, the Bank had raised UA 1.9 billion under the 2012 borrowing program based on cash-flow requirements. The program provides the Bank's annual debt issuance ceiling for mobilizing resources from the capital markets to provide financial assistance to its member countries.

US $300 Million Line of Credit to FirstRand Bank Limited

The US $300 million medium-term, multi-currency line of Credit to South Africa's FirstRand Bank Limited will be used to finance projects in a number of sectors and across a number of African countries. The amount will be drawn in multiple African currencies including: Nigerian Naira ("NGN"), Kenyan Shilling ("KES"), Zambian Kwacha ("ZMK"), Ghanaian Cedi ("GHS"), Mozambique Metical ("MZN") and Tanzanian Shilling ("TZS").The FRB is South Africa's third largest bank with a market share by total assets of 19.8 per cent as of December 31, 2011 and represents the banking interests of FirstRand. It provides a comprehensive range of retail, commercial, corporate and investment banking services in South Africa. FRB is the largest entity within the Group and accounted for 89.66 per cent of its consolidated assets in the year ended June 30, 2012 with the Group's African subsidiaries and other activities accounting for the remainder. It has an existing pipeline of projects of up to US $4.62 billion targeting primarily large and medium-sized enterprises in a number of African countries, including but not limited to: Kenya, Tanzania, Zambia, Mozambique, Ghana and Nigeria.

The Facility will have a tenor of up to seven years inclusive of a grace period of up to three years.

The line of credit to FRB would help mobilize significant financial resources in the countries where its proceeds will be deployed, ultimately contributing to economic development and employment opportunities. Moreover, the Facility is expected to contribute to government revenues, the development of local capital markets as well as regional integration, among other benefits.

US $150 Million Senior Loan to Gabon Fertilizer Company

The loan will be used for the construction and operation of a greenfield ammonia/urea complex and ancillary infrastructure to produce 1.3 million tons per annum (MTPA) of granular urea in the Special Economic Zone (SEZ) of Port-Gentil on the country's western Atlantic coast. The borrower and project company - The Gabon Fertilizer Company SA (GFC) is incorporated locally as a "Société Anonyme". Its shareholders are Olam International - Olam (78 per cent), Tata Chemicals Limited - TCL (10 per cent), and the Republic of Gabon - RoG (12 per cent). Both Olam and TCL are listed companies.

The project is commercially viable. It is projected to create over 3,000 jobs during construction, and 354 direct jobs and over 2,500 indirect jobs during operation, with extensive training program targeting nationals. Local and national SMEs will benefit from outsourcing activities through a Business Linkages Program, with Bank support through the Industrial Inclusive Program Technical Assistance.

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